ABSTRACT
Bankers' balances at the Bank of England are reserves of the commercial banks placed on deposit with the Banking Department. These were made because the banks needed a secure institution to hold their reserves and as the Bank took on the role of a central bank it became the natural place for reserves to be lodged, and partly for the purposes of settling the clearing of cheques. Bankers' balances have increased through the period 1870-1982 with the growth in money supply and in bank deposits. In the late nineteenth century, this increase was in part also a result of the amalgamation movement in English banking. During the inter-war years, the London clearing banks conventionally maintained an aggregate reserve/deposit ratio of 10 percent. The Bank of England Act, 1946 gave the Treasury power to direct the Bank of England and gave the Bank power, with Treasury consent, to give certain directions to bankers as were deemed necessary in the public interest.
